Housing loan approvals dropped again in May by -2.4% as investors and owner occupiers continue to wait (or have to wait) before taking the plunge into the residential market. The May numbers were influenced by the lead up to the Federal Election with the housing policies of the major party's quiet different.
Total lending for the month is down -20.8% on May of 2018 with investor loans still -28% lower than the pcp and owner occupiers loans down -18% on the pcp.
Signs that the rate of decline was slowing have been dispelled this month with the year on year comparisons below, showing just how persistent the decline has been.
Recent announcements by APRA and ASIC on the loan servicing assessment criteria and the drop in interest rates is expected to assist credit growth over the coming months.
There is some anecdotal evidence that conditions are improving with higher auction clearances and a reduction in price discounts in Sydney & Melbourne, however sales volumes remain significantly below that of previous years.
We continue to expect credit growth to improve slowly over the next 12 months.